MMR is for life not just for Easter
The Financial Conduct Authority’s recent MMR readiness survey found that two thirds of firms are on track to implement MMR when it is implemented on 26 April next year.
But Walker-Smith cautioned that firms should be careful about how they structure their systems as they move towards MMR compliance.
He said: “Organisations need a long term view when it comes to MMR. It’s not just about getting ready for implementation.
“There was speculation that the FCA may not continue to press through with MMR following the transfer from the Financial Services Authority. However, this has not been the case and they are clearly in it for the long haul.
“Ongoing management and maintenance of the systems and process firms put in place is essential to ensuring continued compliance.
“To systems we put in place now have to be robust, scalable and reportable.”
With the mortgage market predicted to grow to over £190bn next year scalability of the systems could be an issue for some firms.
With some firms having been planning for MMR for some time the mortgage markets expected growth could cause difficulties for some.
Walker-Smith said: “There are more things to consider than the initial set up of the systems required to implement MMR.
“The FCA has already said that large and medium firms need to be considering the systems and controls that they have, or will be, putting in place.
“The FCA will come and ask about these systems and when they do they need to be robust.”
Walker-Smith also said that the mortgage industry should start to look at the Key Performance Indicators that it currently uses to monitor staff.
He said that as the FCA moves its focus on to the source inputs of cases and the customer outcome KPI’s must be changed to ensure the regulator is satisfied.
He said: “Traditionally KPI’s for mortgage advisers have had an emphasis on hitting sales targets.
“However, there is going to have to be a change in the way firms monitor advisers. We could see a situation where the FCA is asking if the hitting of sales targets is at the expense of quality advice.
“We’re not saying lose the emphasis on sales but KPI’s need to become more qualitative than quantitative.
“Whilst we are not likely to see issues from KPI’s manifest until the third of fourth quarter of 2014 there is the risk of a problem arising.
“MMR is going to lead to a cultural shift in the way many firms do business. The FCA will make an example of someone but you don’t want it to be you.”